I am a CPA in Texas with an MBA from the University of Chicago. I have seen a lot and made many mistakes. Hopefully by now I will have learned something from them. Just as importantly, you may learn something from my mistakes. You can e-mail me by clicking on my "View my complete profile".

Thursday, September 4, 2008

The Tobacco Settlement Scam

"In a town infamous among industrial executives for handing the state a $2.4 billion jury verdict against lead-paint manufacturers, the AGs hailed their biggest litigation win so far: the $260 billion-plus tobacco settlement signed in 1998 to end lawsuits over tobacco-related medical costs. ... Left unremarked upon was one of the largest beneficiaries of the settlement: NAAG. ... 'This is a de facto regulatory agency, they just don't call it that,' says Michael S. Greve of the conservative American Enterprise Institute. 'It corresponds to nothing we know about the constitutional landscape.' ... The organization is battling persistent, if thus far unsuccessful, legal attacks on the Master Settlement Agreement by smaller tobacco companies, who say it is an anticompetitive scheme that allowed the big manufacturers to raise prices indiscriminately. ... Much of what NAAG and the AGs do is conducted in secret. That confounds Mamaroneck, N.Y. attorney Leonard Violi, who's suing the attorneys general of 30 states on behalf of the Canadian Iriquois Confederacy, who claim they've been shut out of the U.S. cig market. 'You're talking about the highest law enforcement officers of the states,' Violi says. 'What do they have to hide'?," my emphasis, Daniel Fisher at Forbes, 1 September 2008.

The tobacco settlement is one of the most misunderstood pieces of "legislation" I have ever seen. It is: AGs cartelizing the tobacco industry, in return for collecting "excise taxes" called a settlement. The DOJ should have killed the "settlement" as a Sherman Act violation. It didn't. Why? Because the tobacco companies like it! Think about it, paraphrasing Fred Cederholm.